Investors currently see Amazon Pantry as competing head to head against Ocado, so they sold OCDO. No one wants to bet against Amazon.

But there is an interesting theory — first proposed by Goldman Sachs analyst Rob Joyce and his team back in August 2015 — that Amazon might actually be good for Ocado stock in the long run.

Here are the main points:

It makes OCDO look more like a takeover target, especially if Amazon wants to expand quickly. Thus OCDO ought to go up.

Amazon Pantry's expansion will increase pressure on UK supermarkets — and other groceries in foreign territories, particularly the US — to get their online delivery acts together, and the best way to do that is to sign a deal with Ocado, either to let Ocado deliver their goods or to license Ocado's online platform and delivery infrastructure, which is better than everyone else's.

Amazon Pantry doesn't deliver the wide range of products that Ocado does (it doesn't do fresh or frozen food, for instance) and this will drive disappointed shoppers to Ocado. Most people who want groceries delivered want all their shopping delivered, not just some of it.

Online grocery delivery is a lot more complicated than most people think, and Ocado is masterful at it. Amazon, by contrast, has a spotty track record so far.

Goldman's Joyce says:

[In] markets where Amazon has a local site outside of the US, it holds dominant positions where it entered the market early on. However where the company entered already developed online retail markets, incumbent online players have retained strong positions (Exhibit 3). For example, if we look at India and China, established online incumbents Flipkart and Alibaba have continued to grow strongly and maintain dominant market shares despite Amazon’s entrance. In this context we highlight that the UK online food retail market is already well established (c.6% online penetration compared to c.1% globally).

So far, the thesis isn't working out (much to the chagrin of Ocado investors like me). Amazon's mere media presence is crushing Ocado stock. Nonetheless, this is a long game. Ocado has only ever had critics who think it will fail, and its revenue base has only ever grown. It is years ahead of Amazon in this fight.